In the festive round-up towards the end of the year, shopping comes to mind as many look to purchase the new ‘it’ item or stocking up on good deals as retailers make space for the new year.
But in today’s day and age, more are looking towards online purchasing as the new norm for getting gifts or good deals.
With Malaysia on the fast-lane to develop its digital economy, its people are rapidly embracing the digital culture, triggering the need for the retail sector to adopt to this change to capture this new, modern consumers market.
Malaysia’s digital economy has strengthened further and is now one of the main contributors to the country’s economy and projected to account for 18.2 per cent of gross domestic product (GDP) this year.
Minister in the Prime Minister’s Department Datuk Seri Abdul Rahman Dahlan said the performance was expected to continue next year, driven particularly by the rise in eCommerce.
At the e-Entrepreneur Convention 2017 held earlier this year, during a dialogue session, he pointed out that the importance of the digital economy was obvious as demonstrated by the five-day #MyCybersale 2016 which generated online sales of RM211 million.
Towards this end, the government would implement various initiatives to assist Malaysian entrepreneurs penetrate the online marketing trend, Abdul Rahman said.
With programmes such as eUsahawan and eRezeki programmes organised by the Malaysia Digital Economy Corporation (MDEC), he highlighted that thousands of Malaysian entrepreneurs are being trained to do online business in the aspects of marketing.
Further realising the growing prospects in eCommerce, the Malaysian government had also introduced the National eCommerce Strategic Roadmap 2020 goals, which involves plans to develop Malaysia’s eCommerce industry including the establishment the world’s first Digital Free Trade Zone (DFTZ), in collaboration with Alibaba, which aims to spur the involvement of local businesses in the digital trade and retailing world.
The DFTZ is expected to be a boost to Malaysia’s eCommerce roadmap which aims to double the nation’s eCommerce growth and increase the GDP contribution to RM211 billion (approximately US$47.68 billion) by year 2020.
“Malaysians have embraced the internet economy and eCommerce in a big way. We are now leading the eCommerce market in the region generating revenue of US$2.3billion in 2015.
“With the launch of the world’s first DFTZ, Malaysia will serve as a regional eFulfillment center, and also become the regional hub for SMEs, marketplaces and monobrands,” said Prime Minister Datuk Seri Najib Tun Razak, during the launch of DFTZ earlier this year.
DFTZ has the potential to double the growth rate of Malaysian SMEs’ goods export by 2025. It is also estimated to support US$65 billion worth of goods moving through DFTZ. Additionally, DFTZ is expected to create 60,000 direct and indirect jobs by 2025.
Suffice to say, the prospects of eCommerce in Malaysia is very promising.
AT Keaerney in its ‘The 2017 Global Retail Development Index – The Age of Focus’ report, believed that for Malaysia, online retail will grow at 23 per cent per year through 2021, driven by electronics and media, which will acount for 40 per cent of total online sales in 2017.
The reach of eCommerce in Malaysia will expand thanks to the government’s digital outreach programmes and plans across the country.
Meanwhile, eCommerce platform, Lazada Malaysia, is confident that eCommerce will maintain, if not surpass the precedent for our country’s development towards the fourth industrial revolution.
It predicted that more than two million new customers will adopt online shopping in 2018, with a 30 per cent increase in the frequency of shopping online monthly, further catalysing the nation’s overall eCommerce growth.
With that, BizHive Weekly takes a look at the eCommerce industry and developments by major eCommerce players in Malaysia:
Malaysia’s biggest online sale event; #MYCYBERSALE, is a testament of the strength and importance of Malaysia’s eCommerce industry to the country’s economy.
First introduced in 2014, the #MYCYBERSALE initiative, organised by MDEC under the Digital Malaysia Initiative, acts as a catalyst to develop the eCommerce industry as well as to boost the online shopping culture in Malaysia.
This year, #MYCYBERSALE achieved a gross merchandise value (GMV) of RM311 million – exceeding the RM300 million target set for 2017.
About RM39 million of the RM311 million GMV were derived from international shoppers, surpassing the export revenue target of RM20 million. This growth is over 254 per cent from the 2016 export revenue of RM11million.
“This year’s GMV results is good news for the growth of e-Commerce in Malaysia. It shows that Malaysians are continuing to embrace the online shopping culture as long as there are a variety of products offered at good discounts,” said Ganesh Kumar Bangah, chairman of e-Commerce Malaysia, a chapter of the National ICT Association of Malaysia (PIKOM).
“The outstanding export revenue growth shows that Malaysian online merchants, especially SMEs have great potential to reach out to their customers beyond borders,” he added.
Ganesh added that the recently launched DFTZ also augurs well with PIKOM’s own efforts to promote eCommerce and help SMEs to expand their businesses abroad.
11street sees shocking 11.11 sales
Another eCommerce platform, 11street, also recorded a healthy boost in its sales for its Malaysian buyers during the 11.11 global online event, further solidifying the fact that there is a growing eCommerce culture in Malaysia.
It reported that within the 11.11 total order volume spike, 11street saw a record breaking number of orders for overseas products which increased by 600 per cent from average daily orders.
Likewise, e-vouchers and services also experienced growth throughout its 11.11 sales event, which increased by 70 per cent.
It also pointed out that traffic to its site more than doubled with 85 per cent contributed by mobile devices in one day, indicating the shift to m-commerce due to the growing mobile penetration.
ShopBack reports higher online shopping traffic
Online cashback platform Shopback Malaysia said, the average spending by a Malaysian shopper on 12.12 Online Revolution was RM310 per customer, a three-fold increase over the RM98 spent per customer on 11.11 Single Day.
In a statement, ShopBack said the better performance was due to the increase in travel bookings made for the year-end and school holidays season, Christmas gift purchases and apparel purchases for New Year.
ShopBack Malaysia Country general manager Alvin Gill said Lazada, Zalora, 11street and Booking.com emerged as the top stores among 30 over stores partners while vouchers and services, fashion and travel were the most popular categories.
“For the Malaysian market, it is estimated that the gross merchandise value for 12.12 would be more than RM6 million, a 200 per cent growth from last year’s 12.12 Online Revolution,” he said.
He said across the region, 60 per cent of shoppers including Malaysians used mobile devices to shop on 12.12 while 40 per cent preferred to use the desktop computer.
Lazada sets the record in Southeast Asia
According to Hans-Peter Ressel, chief executive officer of Lazada Malaysia, 2017 was a phenomenal year for the eCommerce industry, especially for Lazada Malaysia.
“We fine-tuned our logistics systems with impactful innovations, introduced #EveryoneCanSell for our sellers – enabling them to grow their online businesses, increased our assortment to 100 million SKUs and tripled our offerings to customers through the introduction of renowned brands.
“We are all fired-up for the grand finale of our Online Revolution shopping spree, from 12.12 to 14.12 (December 12 to December 14), and we look forward to revolutionise the online shopping landscape in Malaysia in 2018, and beyond,” he said in a statement.
On a regional base, across Southeast Asia, Lazada’s Single’s Day event generated US$123 million of GMV, representing a 171 per cent year-on-year (y-o-y) growth.
The 11.11 Single’s Day event saw shoppers purchasing 6.5 million items, an surge of 191 per cent over last year.
It said, over 70 per cent of orders were placed from mobile devices, emphasising that the combination of meteoric smartphone adoption and a fast-growing middle-class is driving the Online Revolution.
Meanwhile, at a panel discussion Hans-Peter Ressel, together with Nicole Tan, Country Director of Facebook Malaysia; Nor Azizan Tarja, Group Chief commercial Officer, Pos Malaysia Berhad; and Datuk Dr Hafsah Hashim, Chief Executive Officer of SME Corp, observed several eCommerce drivers for 2018.
Amongst them was Small and Medium Enterprises’ (SMEs) great role in pushing digital boundaries, as SMEs in Malaysia have already begun their journey towards playing an integral part in Malaysia’s digital transformation.
In fact, 1,900 SMEs have already participated in the recently launched Digital Free Trade Zone (DFTZ) to market their products internationally, expanding their reach from 30 million to 600 million global customers.
This figure is expected to double in 2018 to 4,000. Additionally, programmes such as #EveryoneCanSell, which Lazada is a part of, is set to increase the number of SMEs establishing their businesses online to 45 per cent by empowering them with trainings and solutions at every stage.
Reports are rampant on how the digital world are quickly eating into the traditional, more hands-on way of life. This fear is more prominent for brick and mortar retailers as they find it difficult to capture capture value, and stay relevant for 21st-century shoppers.
However, not all is doom and gloom for these retailers as Nielsen Holdings plc (Nielsen) pointed out in its ‘Global Connected Commerce’ report, that the fears about the impact on physical store traffic may be somewhat inflated.
“Consumers aren’t simply ‘showrooming’ – browsing in store and then going online in search of the lowest-cost option. They’re also ‘webrooming’ – researching online and buying in stores.
“This is particularly true for durable and higher-priced categories such as consumer electronics, mobile products and furniture/décor, as the majority of consumers in the survey say they conducted research online prior to buying regardless of whether the purchase was in-store or online,” the survey company said based on a recent survey on consumer trends.
“It’s well known that the impact of online shopping goes well beyond direct sales,” said Nielsen’s Growth Markets Group president Patrick Dodd.
“Digital is viewed less as a threat to brick-and-mortar retailers and more as an opportunity. Instead of thinking in terms of online and off, savvy retailers are taking an integrated approach to drive sales in both and providing an engaging experience for consumers regardless of whether they buy in-store or online,” he added.
Based on its survey, it noted that respondents in Asian countries such as Thailand, the Philippines, India and China frequently research products online before buying in stores or use online reviews to help make grocery purchasing decisions.
“The importance of online research in all of these markets is likely driven by wide variation in product quality, the prevalence of social networks and the importance of keeping up with the latest trends,” the report added.
McKinsey & Company (McKinsey) also highlighted that the digital shopping revolution offers new opportunities to physical stores and mall operators agile enough to seize them.
It underlined; malls of the future will be less about in-store shopping and more about giving people novel in-person experiences they can’t get on their smartphones or what some call ‘retail-tainment’.
“Digital technology is a threat to malls because it enables shoppers to buy online. Yet at the same time, technology presents meaningful opportunities to operators who know how to use it,” it suggested in its recently published article.
“There is great potential for malls to use digital technology to significantly improve the consumer journey and shopping experience. Shoppers want a seamless, frictionless experience between online and offline, with little distinction between the two channels.
“That could mean buying online and picking up at the store or at centrally located ‘collection lounges’, buying online and returning to stores, getting purchases delivered to one’s home, and using a mall’s app to make purchases from mall stores, which Westfield has pioneered in some of its malls.
“Delivering this kind of omnichannel experience requires that both mall operators and retailers update their operations so that back-end systems can absorb and analyse the data coming from front-end applications,” it added.
It also pointed out that technology can also be used to provide visitors with a better overall experience at the mall.
“Mobile apps can offer personalised recommendations and promotions, itinerary planning, digital navigation, and the booking of various services, including advance food ordering so that customers find their meals ready upon arrival,” it said.
“There is no doubt that mall operators are facing a challenging environment. But those that are willing to jettison old models and build more dynamic and relevant destinations will be able to create profitable malls that today’s shoppers almost won’t recognise,” it stressed.
McKinsey further noted that digital technologies and changing shopping habits are a clear threat to traditional retail business models.
“But there are positive ways to respond to these trends. To embrace these opportunities, real-estate developers must get closer to consumers and figure out how to meet their evolving wants and needs.
“That means rethinking the role of the shopping mall, and adapting its strengths to those of the virtual world,” it added.
With its rapid growth for the past few years, the fear of market saturation has hit the eCommerce industry as more traditional retail industries hop on board this digital trend.
But as technology evolves, newer technologies open up more opportunities for eCommerce retail players to further evolve and enhance their services to keep ahead of the competition.
The future of eCommerce, according to tech experts, would be more mobile or involve the rarely explored virtual reality market. Experts also believe a more personalised or omni-channel retail experience could be upon us.
“In the near future, customers will likely use augmented reality (AR) and virtual reality (VR) to explore and interact with potential purchases. VR, alongside its sister technology, augmented reality, offers retailers the opportunity to transform how they interact with the consumer,” KPMG International Cooperative (KPMG) said in its recently published ‘Global retail trends 2017’ report.
“Spending on augmented reality and virtual reality in Western Europe will likely reach US$2.5 billion in 2017, a 131 per cent increase over 2016, according to the International Data Corporation’s Worldwide Semiannual Augmented and Virtual Reality Spending Guide released in March 2017.
“IDC expects that consumer markets will be the largest AR/VR spending segment this year, accounting for more than 56 per cent of spend.
“Adding analytics to the mix, retailers can use predictive analytics to forecast their customers’ next moves. This is also forcing retailers to reinvent the in-store experience. Pairing AR and VR with predictive analytics is a powerful combination for any retailer who is able to connect these dots,” it added.
Aside from that, KPMG highlighted that online shopping via apps on mobile smart devices, or m-commerce, could be the next trend in eCommerce.
It said, “The average person checks their device 85 times a day, spending a total of five hours browsing the web and using apps. This equates to around a third of the time a person is awake, and is twice asoftenas many people even realise.
“eCommerce has been steadily on the rise in recent years, but it may not be the next true frontier for shopping as m-commerce continues to become more popular.
“Mobile-first sites, dedicated apps, emerging payment methods and other tools are making shopping on smartphones much easier.”
It added that an e-Marketer report showed that in 2016 global mobile sales made up 34 per cent of all eCommerce transactions around the world, and it is predicted to grow 31 per cent in 2017.
Aside from that, it believed that omni-channel services would be adopted by more retailers as consumers seek a more holistic way of shopping.
“In order to drive loyalty as well as repeat customers, retailers are now focusing on the whole customer experience from the moment they consider a purchase through to the after-sales service.
“Retailers have started to understand the importance of curating the whole experience. Furthermore, digital convergence has the potential to transform the customer experience – a glowing opportunity for retailers toset themselves apart.
“In the next few years, interaction with a variety of technologies such as bots is expected to reinvent the customer experience.
“Retailers that are performing well have connected their physical and digital presence to deliver an enhanced customer experience.
“A seamless hand off between and among technologies, and in-store during single and multiple journeys is becoming a must as customers come to expect a ‘phygital’ experience,” it added.
Customised services and experience are also expected to be something savvy consumers will be looking for.
KPMG’s recent survey of more than 18,000 consumers found that customised promotions, exclusive member offers and customer recognition across channels were among the top ten drivers of customer loyalty.
It pointed out that the retail industry should continue to see retailers leveraging personalisation in order to bring together all digital and physical channels and this would likely create a true omni-channel customer experience.
“It is clear that personalisation is the future of retail, and the latest technologies are enabling retailers to rise to the personalization challenge. Industries, not limited to retail, are all experiencing increased pressure to provide something that simply cannot be reproduced online,” it added.
Overall, Malaysia’s eCommerce industry has ample room for growth.
In a published article on DHL’s Logistics of Things, DHL’s eCommerce chief executive officer Charles Brewer in his ‘All eyes on Malaysia for the next e-Commerce boom’ viewpoint, believed that there is potential in Malaysia’s eCommerce given its growing digital consumer market.
He said, “The market is ideally situated in the heart of the Asean block of countries, which has some 625 million people.
“The country also boasts high-speed internet reaching almost three-quarters of the population, plus a well-developed infrastructure, making it highly attractive to foreign firms.
“Malaysia’s digital population is around 20 million strong and its eCommerce market is one of the most developed of all the Asean countries, excluding Singapore.”
With Malaysia placing emphasis on developing its digital economy and making 2017 the ‘Year of Internet Economy’, exciting things are
happening in Malaysia’s eCommerce realm.
Source: Borneo Post Online